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Family Business
Advisory Services
Family business enterprises are critical to the success of the
Indian economy
Many of India’s largest and most celebrated companies today are nurtured by a group of promoters
and family members who have drive, determination and a never-say-die entrepreneurial spirit. The
significance of family-run businesses has grown and today, many family businesses have stepped
beyond their footprint to acquire companies in new industries and new geographies. At PwC, we
recognise the valuable contribution that family businesses have made, and will continue to make,
towards the growth of the Indian economy, be it through increased employment, investment outlays,
community initiatives, giving back to society or contributions to the exchequer.
With the new normal being defined by Indian and global political, economic and market conditions,
family businesses need to plan strategically for both aspects—the family and the business. While
family businesses can boast of advantages over non-family businesses, they have their own unique set
of challenges.

Family business diagnostic*

Strengths
Commitment, passion and dedication to the business
as family business owners have greater personal
stakes involved; higher entrepreneurial spirit and risk-
taking appetite
More likely to retain talent in tough economic times
Long-term approach to decision making and greater
flexibility, leading to faster decision making
Deep industry insight and knowledge through focus
across generations on select industries
Strong culture and value system; long-term perspective
of the business, and loyalty and commitment to its
growth and development
Stable leadership patterns
Willingness to pass on knowledge and experience
to the next generation; ensuring reinvention with
every generation
Challenges
Need to continuously innovate to stay ahead; using
digital and technology as enablers and bringing
about changes in the organisation to keep pace
with disruptions
Attracting and retaining the right talent given the
perception around growth of professionals in a family
business organisation
Misalignment of incentives among family members,
family disagreements and family politics; managing
diverse opinions of family members and professionals in
the business and in decision making
Regular and streamlined access to capital to help grow
and evolve the business
Sustaining the same commitment across generations
and levels in the organisation
Need to professionalise the business and informal
management structures
Mentoring and developing the next generation of
successors (succession planning) and dealing with
differing opinions and interests across generations. The
next generation may also face challenges in proving
itself to the current generation.

*Source: PwC India Family Business Surveys - 2014 and 2016

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 Managing family dynamics

A family business involves the interplay of three components—family members who own and control
the family business, owners who may comprise the family as well as outsiders, and the business itself.
Managing family business dynamics requires delicacy and sensitivity. The three-circle model is a
powerful tool to understand diverse interests and expectations in a family business.

Three-circle model1 Roles in the family business:

1. Family members
2
Owner 2. Third-party investors
3. External managers/staff who are not owners
4 5 4. Family owners not working in the business
7
1 3 5. External managers who are owners
Family 6 Business 6. Family employees who are not owners
7. Family owners working in the business

How can PwC assist you?

Our independent voice helps guide family
enterprises in making decisions which benefit
the family as well as the business.
The succession planning imperative
While a family business structure can be an
extremely successful business model, one of the
biggest challenges that such a business faces is
around succession:
• Succession of ownership
• Succession in management
Forty per cent of businesses worldwide will
undergo succession in the next five years.2
Having a clear and actionable succession plan
will help family enterprises avoid unnecessary
disputes and attention while solving sensitive
matters and ensure business continuity.
Through our interactions with family business
owners, we have realised that a large number
of families do not formalise succession plans,
leaving the next generation unprepared for the
challenges ahead. PwC India Family Business
Survey 2016 indicates that only 15% of family
businesses in India have a robust, documented
and communicated succession plan in place.
Thus, challenges may crop up should the next
generation not embrace the family business in
ways that are deemed appropriate. Issues also
arise when the next generation does not support
the family member chosen to lead the business.
Succession planning is not an event. Rather, it
is a series of processes and systems put in place
for all key roles, key functions and key locations
to ensure the business is not impacted as it
transitions from one generation to the next or,
with an increased focus on professionalisation of
operations, even to someone outside the family.
At PwC, we have developed mechanisms to assist
families with succession planning and ensure
that succeeding generations remain supportive
of their family business management leaders.

1 http://johndavis.com/three-circle-model-family-business-system/
2 http://www.pwc.com/gx/en/services/family-business/family-business-survey/next-gen-club.html

Family Business Advisory Services 3

Conflict management
Just as conflicts exist in families, so they exist
in family businesses. Managing conflict is the
key not to only the survival of the business but
also to the survival of the family. Most families
wrongly assume that because they are a family,
they will be in accord on all decisions.
In our experience, in any family business,
members of the next generation need to
establish strong business relationships with
each other and not simply rely on the strength of
family ties. They need to have clarity about the
key issues their generation will face in the future,
issues which may perhaps not be too relevant
to the founding generation—which could make
decisions without the need for consultation.
Family businesses must look holistically at
both the family and the business—from issues
surrounding governance to having the right
business and financial strategies in place in order
to ensure continued growth.
Continuity planning
We understand that each family has a vision for
the future and is fully committed to the success
of its business. However, family members across
generations often have different objectives
and thought processes. As part of the family’s
ongoing commitment to the business, it is
important for all family members to agree on an
overall vision as well as their own convictions. At
PwC, we are familiar with different ownership
models and structures which suit different
philosophies. We recognise how vital it is for
the chosen model to reflect the culture of the
individual family. Some key questions for family
businesses include:
• What is the family’s ownership philosophy
and how important is the continuity of
the business?
• Does the family’s ethos lean towards collective
ownership? Does the use of trusts or holding
companies for the family business’s shares
represent a more effective ownership vehicle?
• Where does the family see its different
members within the three-circle model?
• What are the needs of the next generation
and how can these needs be satisfied while
preserving the vision of business continuity?
• Is it realistic to assume that all members of
the next generation will want to continue as
owners or will this create fragmentation which
must be addressed?

Our thought leadership

PwC India Family Business Survey 2016 provides insights into how family businesses
in India are meeting the demands of today’s marketplace. The outlook of business
families in India is extremely optimistic and the survey reveals a trend with respect
to the direction, mode and means of growth, and the way family business in India are
protecting the family and the business while dealing with conflict.

Since 2008, PwC Family Business Surveys have been providing insights into family
businesses around the globe. PwC’s Global Family Business Survey 2016 captures the
views of over 2,800 family business leaders in 50 countries. The survey talks about the
‘missing middle’—a strategic plan necessary to bridge the gap from where the business
is now to where it could be in the long term.

PwC’s Global Next Gen
Survey 2016 talks about
issues and trends currently
affecting the next generation
working in family businesses.
Private companies are a vital part of global
economies, and many have histories going
back generations, not just years. So, how
do their CEOs see the world of 2017? And
how confident are they about the future?

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 PwC’s integrated Family Business Advisory

Grow revenue Inorganic growth

• Strategy/business model • Mergers, acquisitions and disposals
• Feasibility studies • Due diligence
• Going global • Valuation
• Distribution strategy/channels • Turnkey transaction assistance
• Product/service innovation • Accounting and purchase
• Pricing strategies price allocation
• Digitalisation • Post-deal integration and
• Talent and change management delivering deal value

Manage ownership Finance growth

• Owner’s strategy Grow Inorganic • Exploring financing
• Next gen development revenue growth options
• Family governance • Financial restructuring
• Culture and values • Debt advisory
• Succession planning • Bank reporting
Manage Finance
• Tax and legal advice Manage • Treasury/liquidity
ownership growth
• Exit strategy growth planning/cash flow
• CSR and philanthropy • Working capital
Manage management
Steer the
the risks • Preparing for an IPO
business
of growth
Manage the risks of growth Manage Steer the business
profitability
• Compliance • KPIs and leadership
• Control environment development
• Fraud risk • Cost accounting/
• Insurance coverage transfer pricing
• IT/cyber security • Internal and external reporting
• Regulations • IT strategy
• Sustainability • Business intelligence
• Data analytics

Manage profitability
• Corporate structure simplification
• Reduce cost
• Remove complexity
• Supply chain optimisation
• Improve efficiency
• Asset and business restructuring
• Operational restructuring

Family Business Advisory Services 5

 Our Private and Entrepreneurial Practice

Our services
Our practice helps private business owners and individuals achieve their personal and business ambitions.
We provide a variety of tax and advisory services.
Our solutions
Our mission is to help your business and family wealth grow by bringing the relevant talent and skills to
you. We can provide all the practical and commercial assistance appropriate for your business. We have
built our success on trusted advisor relationships and solutions and ideas tailored to the needs of our clients.

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About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a
network of firms in 157 countries with more than 2,23,000 people who are committed to
delivering quality in assurance, advisory and tax services. Find out more and tell us what
matters to you by visiting us at www.pwc.com
In India, PwC has offices in these cities: Ahmedabad, Bengaluru, Chennai, Delhi NCR,
Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India’s service
offerings, visit www.pwc.com/in
PwC refers to the PwC International network and/or one or more of its member firms,
each of which is a separate, independent and distinct legal entity. Please see www.pwc.
com/structure for further details.
©2017 PwC. All rights reserved

For further assistance with our services, please contact:

Praveen Bhambani
Leader, Private and Entrepreneurial Services
Email: praveen.bhambani@in.pwc.com
Our offices

Ahmedabad
1701, 17th floor, Shapath V
Opp Karnavati club, S G Highway
Ahmedabad - 380 051
Telephone: [91] (79) 3091 7000
Bangalore
The Millennia, Tower D
# 1 & 2 Murphy Road, Ulsoor
Bengaluru - 560 008, Karnataka
Telephone: [91] (80) 4079 4000

Chennai Delhi NCR

Prestige Palladium Bayan, 8th floor Building 10, 17th & 18th Floor
140, Greams Road Tower C, DLF Cyber City
Chennai - 600 006, Tamil Nadu Gurgaon - 122 002, Haryana
Telephone: [91] (44) 4228 5000 Telephone: [91] (124) 330 6000

Hyderabad Kolkata
77/A, 8-2-624/A/1, M B Towers DN-57, Sector-V
Banjara Hills, Hyderabad - 500 034 Salt Lake Electronics Complex
Telephone: [91] (40) 4424 6000 Kolkata - 700091
Telephone: [91] (33)44001111

Mumbai Pune
252 Veer Savarkar Marg Tower A Wing 1, 7th floor
Next to Mayor’s Bungalow Business Bay
Shivaji Park, Dadar Airport Road
Mumbai - 400 028 Yerwada, Pune - 411 006
Telephone: [91] (22) 6669 1000 Telephone: [91] (20) 4100 4444

Family Business Advisory Services 7

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This document does not constitute professional advice. The information in this document has been obtained or derived from sources believed by PricewaterhouseCoopers
Private Limited (PwCPL) to be reliable but PwCPL does not represent that this information is accurate or complete. Any opinions or estimates contained in this document
represent the judgment of PwCPL at this time and are subject to change without notice. Readers of this publication are advised to seek their own professional advice before
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© 2017 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in
India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member
firm of which is a separate legal entity.
AW/October2017-10875